The Financial Times reports that three teams of private equity firms have formed and are considering bidding on Home Depot's wholesale unit, which could go for about $11 billion. People familiar with the matter say the teams are: (1) Bain Capital, Carlyle and Clayton Dubilier & Rice, (2) Thomas H. Lee Partners, Goldman Sachs' buy-out unit and CCMP (the former private equity arm of JPMorgan Chase), and (3) Blackstone, Kohlberg Kravis Roberts, Leonard Green Partners and Texas Pacific Group. The formation signals what could turn into an intense competition for the unit. Home Depot recently said it was considering selling the unit in order to focus on its core retail business. Previous CEO Bob Nardelli, who resigned in January, invested about $8b in the unit in search of new growth, but the strategy met with disapproval from investors who said that wholesale offered lower margins than retail, and that the unit distracted management attention and resources from its core business. However, in a earnings warning issued yesterday, the company said it expected the unit's share in the company's earnings to rise from 13% to 15%, which some analysts took as a sign it was backing off from the notion of spinning it off.
Sources: Financial Times (via MSN), MarketWatch
Commentary: Home Depot Warns Investors of Earnings Miss • Why Home Depot Still Has a Chance • Goldman: Home Depot Should Take Cues from Canadian, Mexican Success
Stocks/ETFs to watch: The Home Depot Inc. (HD)
Conference : The Home Depot F4Q06 (Qtr End 1/28/07) Earnings Call Transcript
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